Monday, October 22, 2007

Currency Trading Systems – Getting a Successful One For Big Profits

By: Kelly Price
If you are going to trade currencies then you need a currency trading system and below we are going to give you the points you need to consider when building one for yourself which is a lot simpler than many traders believe.

Firs Things First.

Currency trading is a game of odds not certainties so ignore any of the theories or inputs that claim you can predict with science.

So immediately bin Fibonacci, and anything to do with Elliot wave or Gann. They don’t work and won’t help you achieve currency trading success.

Now - its time to get a currency trading system together, that trades the odds and keep this in mind:

Your system should be simple.

It should only contain a few indicators and use support, resistance as its foundation.

It’s a known fact that simple systems work best, as they are more robust in the face of ever changing market conditions.

Make a system to complicated and it has too many elements to break and will lose.

Now here is your currency trading system plan.

1. Base it On Support and Resistance

Make sure that it’s valid i.e. several tests, that if the levels hold or break, their considered important by the market.

2. Use valid Data

That means forex swing trading or trend following, with data long enough that you can calculate the odds. Forget forex day trading systems - they don’t work and never will as the data is too short to be meaningful.

3. Use Breakouts

By all means sell into resistance and buy into support, but if the levels give way remember to:

Buy breakouts!

If you don’t, you will miss some of the best high odds trades.

It’s a fact that most of the best trends start from new market highs NOT market lows. If you don’t know about breakout methodology, its simple to understand and a timeless way of making money, so make it part of your forex education.

4. Confirm Confirm Confirm!

Don’t simply execute trading signals and hope that levels hold or break - confirm them first.

This is one of the major errors novice traders make, they want to predict.

Well, if you predict you are hoping and the market will slaughter you - so make sure you confirm.

Make sure price momentum is going in the direction of your trading signal. If you don’t know about momentum indicators then its time to learn. Start with the stochastic, Relative Strength Index and ADX, There are more but these are excellent ones to start with.

These indicators will confirm and trigger your trading signal so you’re trading with price momentum and the odds will be on your side.

5. Understand Standard Deviation

If you don’t understand standard deviation of price and volatility, you will lose.

Volatility destroys more novice traders than anything else – so learn to deal with it or join the 95% of traders who get wiped out.


If you understand the 5 points above and work on them, you can build your own currency trading system – it’s not hard to do.

The difficult part about forex trading is not so much getting a method - but having confidence in it and trading it with discipline. If you don’t trade with discipline you will lose and you must have confidence to acquire discipline.

If you build your own system based upon the above points, you will have a logical simple system, which is easy to understand have confidence in, can lead you to big Forex profits and currency trading success

1 comment:

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